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Should the cost of purchasing annual license for Microsoft office 365 be capitalized or expensed?

Should the cost of purchasing annual license for Microsoft office  365  be capitalized or expensed?

asked Nov 20, 2017 in General IFRS Discussion by anonymous

2 Answers

0 votes
According IAS 38-intangible assets are following criteria is to recognize license
1) Intangible is identifiable
2) Power to obtain benefits from the assets
3) Future economic benefit is expected.
If following criteria met then you can capitalize Microsoft license.

Further it need to consider that software is for one year or more than one year, if license is granted for more than one year  then it would be recognized as non current assets. And will be amortized as per company policy. the capitalization of assets is also need to consider the organization's policy for the recognition of assets and expenses, however some companies have set the certain limits for the capitalization. Example: company has set the policy that an assets having cost amount $50 will be recognized as expense then it should be expenses out if the cost of an asset is upto $50.
answered Nov 20, 2017 by Maher Ali Level 2 Member (4,610 points)
0 votes
Capitalize and amortize over the year.
answered Jan 20 by Kkb
reshown May 21 by Visio